Embracing volatility

Watch CEOs share their outlook for the global economy
View extracts from our in-depth interviews with the CEOs of organisations including Rio Tinto, Ayala Corporation, and Deutsche Bahn AG.

The rise in investment and commerce to and from emerging economies – more pronounced than in any period over the past decade – is lending support to CEO confidence despite today's economic volatility. Half of CEOs in developed markets believe emerging economies are more important to their company’s future than the developed markets they're currently in, as do 68% of CEOs who are themselves based in emerging markets.

(c) 2011-2012 PwC. All rights reserved. PwC refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firms professional judgment or bind another member firm or PwCIL in any way.

The strength of cross-border ties.
CEOs believe that the forces of global integration will stay on track: 45% believe the world will become more open to free international trade (with fewer than a third expecting a pullback) and 56% are convinced that cross-border capital flows will not come under new constraints.

(c) 2011-2012 PwC. All rights reserved. PwC refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firms professional judgment or bind another member firm or PwCIL in any way.

We do not know how the Arab Spring will end or spread. We don’t know how the situation with Iran is going to develop. We are uncertain about the position that the US would like to take in the region – in North Africa and the Middle East. There are political uncertainties that make it hard to forecast, and these are of concern.

The balance sheets of companies are very strong. The cash balances are extraordinarily high. Companies are incredibly efficient. Everyone’s poised for activity, and with a little less uncertainty, you’d see the whole world grow economically.

In the case of the EU, it seems that all its members were anxious to benefit from the union but some didn’t want to uphold their responsibilities. The members of ASEAN must not fall into the same trap.

The emergence of a middle-class in India and in China is going be a huge stimulus for the global economy over the next 20 years. Additionally, emerging technological advances – whether in the digital domain, bio-technology, or any number of fields – still have a long way to go before their full positive effect on the economy is felt. So I am concerned about the next two or three years, but optimistic over the long-term.

Most clients are talking about reductions in spend. I think they will eventually move to do more outsourcing, which will be good, but that will take some time as they think through the consequences. What’s clear, though, is they can’t stop spending on technology because the way the world is changing.